Opinion
COA23-105
11-07-2023
ANTHONY L. LOWDER, Plaintiff, v. CHRISTINE M. LOWDER, Defendant
Ferguson Hayes Hawkins PLLC, by Edwin H. Ferguson, Jr., for defendant-appellant. Wofford Burt PLLC, by J. Huntington Wofford, for plaintiff-appellee.
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
Heard in the Court of Appeals 5 September 2023.
Appeal by defendant from order and judgment entered 2 August 2022 by Judge Phillip L. Cornett in Stanly County No. 19-CVD-63 District Court.
Ferguson Hayes Hawkins PLLC, by Edwin H. Ferguson, Jr., for defendant-appellant.
Wofford Burt PLLC, by J. Huntington Wofford, for plaintiff-appellee.
THOMPSON, Judge.
In this domestic case, defendant appeals from the Amended Equitable Distribution Order and Judgment entered by the trial court on 2 August 2022 raising several challenges to the findings of fact made below, as well as to the classification and valuation of the former marital residence. Deficiencies in the record on appeal require this Court to dismiss the arguments of error in the factual findings. We agree, however, with defendant's contentions regarding the trial court's failure to comply with the North Carolina General Statutes regarding classification and valuation of property, and we therefore reverse the Amended Equitable Distribution Order and Judgment in part and remand to the trial court for further proceedings as set out below.
I. Factual Background and Procedural History
Plaintiff husband and defendant wife were married on 27 March 1999 and two daughters were born of the marriage. On 7 October 2018, the couple separated and on 18 January 2019, plaintiff filed a complaint for equitable distribution and a motion to recover separate property, in which plaintiff alleged that defendant would not allow plaintiff to recover certain items he had left in the marital residence. On 7 October 2019, defendant filed her answer and counterclaim. In their pleadings, both parties asserted that each of them was entitled to an unequal distribution to the parties' marital and divisible property and an equitable distribution of the parties' marital and divisible debt. On 13 October 2020, defendant filed a motion for interim distribution of the marital residence as well as requesting that rental proceeds from rental properties-306 Old Charlotte Road and 949 Old Charlotte Road-be distributed by the trial court from the date of the parties' separation. The trial court heard defendant's motion on 22 October 2020 and, by order dated 2 November 2020, allowed defendant's request to convey to her the marital home and the debt associated therewith in the amount of $50,073.06 and authorizing plaintiff to retrieve certain items of his that were left in the marital residence. The order further stated that "[a]ll items being distributed . . . [would] be subject to valuation by [the] court at the trial of this matter[,]" and that "[a]ll other matters in the motion for interim distribution to include but not limited to the rental proceeds . . . are not dealt with in this order [sic] will be heard at the equitable distribution trial ...." Trial in the matter was set for 26 July 2021.
Although the trial began as scheduled on 26 July 2021, the parties agreed to stop the proceeding shortly after preliminary evidence was presented and an order was entered to have specific items of personal property valued by an appraiser for distribution and/or classification, and the parties further agreed that they would be bound by the appraised values of the items. The trial resumed on 14 December 2021 and was conducted over the course of 14-15 December 2021. On 4 April 2022, the trial court entered an Equitable Distribution Judgment and Order. On 14 April 2022, defendant filed a motion to amend the judgment pursuant to Rule 59 of the North Carolina Rules of Civil Procedure. The trial court heard defendant's motion on 7 June 2022 and entered an Amended Equitable Distribution Judgment and Order on 2 August 2022. On 30 August 2022, defendant timely filed her notice of appeal.
II. Analysis
Defendant presents this Court with five arguments of error by the trial court, to wit: in its (1) valuing the marital residence; (2) ruling on the credibility of the evidence and the court's subsequent valuation of the marital residence; (3) classifying and distributing as divisible property a post-separation increase in the value of the marital residence; (4) determining that a rental property could not be classified and distributed; and (5) finding there was insufficient evidence to classify, value, and distribute rental proceeds from two rental properties. While we find merit in defendant's third appellate issue, we dismiss the remainder of her arguments because, as discussed below, we are not able to meaningfully consider them under the appropriate standard of review upon the record on appeal in this case.
A. Standard of review
Under N.C. G.S. § 50-20(c), equitable distribution is a three-step process; the trial court must (1) determine what is marital and divisible property; (2) find the net value of the property; and (3) make an equitable distribution of that property.
We have stated that the standard of review on appeal from a judgment entered after a non-jury trial is whether there is competent evidence to support the trial court's findings of fact and whether the findings support the conclusions of law and ensuing judgment. The trial court's findings of fact are binding on appeal as long as competent evidence supports them, despite the existence of evidence to the contrary.Sluder v. Sluder, 264 N.C.App. 461, 464, 826 S.E.2d 242, 244 (2019) (citations, internal quotation marks, and brackets omitted).
"The division of property in an equitable distribution is a matter within the sound discretion of the trial court." Cunningham v. Cunningham, 171 N.C.App. 550, 555, 615 S.E.2d 675, 680 (2005) (citation and internal quotation omitted).
It is well established that where matters are left to the discretion of the trial court, appellate review is limited to a determination of whether there was a clear abuse of discretion. A trial court may be reversed for abuse of discretion only upon a showing that its actions are manifestly unsupported by reason. A ruling committed to a trial court's discretion is to be accorded great deference and will be upset only upon a showing that it was so arbitrary that it could not have been the result of a reasoned decision.White v. White, 312 N.C. 770, 777, 324 S.E.2d 829, 833 (1985) (citations omitted). Further, a trial court abuses its discretion where it fails to comply with applicable statutory mandates. Wiencek-Adams v. Adams, 331 N.C. 688, 691, 417 S.E.2d 449, 451 (1992) (citation omitted).
B. Record on appeal
"Appellate review is based 'solely upon the record on appeal,' N.C. R. App. P. 9(a); it is the duty of the appellant[ ] to see that the record is complete." Collins v. Talley, 146 N.C.App. 600, 603, 553 S.E.2d 101, 102 (2001) (citing Tucker v. General Telephone Co., 50 N.C.App. 112, 272 S.E.2d 911 (1980)). See also Carson v. Carson, 177 N.C.App. 277, 279-80, 628 S.E.2d 439, 441 (2006). In addition to lists of items composing a proper record in civil actions as set forth in Appellate Rule 9(a)(1), the Rules make provision for the presentation of transcripts of "trial proceedings [which] are necessary to be presented for review." N.C. R. App. P. 9(c).
Here, defendant as appellant has elected not to include the transcripts of the trial proceedings below as part of the record in this appeal. This choice by defendant prevents this Court from meaningfully addressing most of defendant's appellate arguments because those arguments rest largely or entirely upon challenges to the trial court's findings of fact. Since we review such contentions only to determine "whether there [was] competent evidence to support" them, Sluder, 264 N.C.App. at 464, 826 S.E.2d at 244-a standard which defendant herself cites in her appellate brief-in the absence of the trial transcript, this Court is unable to determine what evidence was before the trial court.
While "noncompliance with the appellate rules does not, ipso facto, mandate dismissal of an appeal," Dogwood Dev. & Mgmt. Co., LLC v. White Oak Transp. Co., 362 N.C. 191, 195, 657 S.E.2d 361, 363 (2008) (citation omitted), and "a party's failure to comply with nonjurisdictional rule requirements normally should not lead to dismissal of the appeal," id. at 198, 657 S.E.2d at 365 (citation omitted), where "the noncompliance impairs the court's task of review," id. at 200, 657 S.E.2d at 366 (citation omitted), dismissal of an argument or an entire appeal may be warranted. Here, the absence of the trial transcripts not only "impairs [our] task of review," id., it entirely prevents this Court from considering all but one of defendant's appellate arguments under the proper standard of review.
For example, defendant challenges the portion of Finding of Fact 12 in which the trial court valued the marital residence as of the date of distribution. The marital home and its associated debt were distributed to defendant pursuant to an Order of Interim Distribution of Marital Property dated 2 November 2020, leaving the issue of the value of the residence to be resolved in the final equitable distribution proceeding which led to the order appealed here. In Finding of Fact 12, the trial court found that the "net value" of the marital residence at the date of separation was $470,000 and at the date of distribution was $555,000, stating that the "appreciation in value . . . was due to market conditions." Defendant contends that plaintiff did not present any evidence regarding the value of the marital residence at the date of the distribution, and thus, the only valuation that could be found as fact by the trial court. We cannot evaluate defendant's argument without knowing what evidence was before the trial court and, accordingly, it is dismissed.
Defendant also challenges the portion of Finding of Fact 12 that states: "Although evidence was presented that [d]efendant was making payments on this indebtedness [on the marital residence] after the date of separation, there was no credible evidence of the actual payment amounts or number of payments made on this indebtedness on this property from the date of separation until date of interim distribution." Defendant contends that because "[t]he record and file in this matter is [sic] replete with documents reflecting payments having been made by [d]efendant since [the] date of separation" and "there are no objections or any responsive pleading by [p]laintiff reflecting that the mortgage indebtedness was not paid .... [d]efendant should be credited with the mortgage indebtedness in the amount stipulated: $50,073.06." Again, in the absence of the trial transcript, this Court cannot ascertain whether plaintiff objected or offered additional evidence on this issue at the proceeding below, and accordingly, we cannot meaningfully evaluate defendant's appellate argument.This argument is therefore dismissed.
Even if the trial transcript had been included in the record on appeal, we note that credibility determinations are left to the fact finder at trial and may not be second-guessed on appeal. Grasty v. Grasty, 125 N.C.App. 736, 739, 482 S.E.2d 752, 754 (1997) ("The credibility of the evidence in an equitable distribution trial is for the trial court. The trial court, as the finder of fact in an equitable distribution case, has the right to believe all that a witness testified to, or to believe nothing that a witness testified to, or to believe part of the testimony and to disbelieve part of it.") (citations and internal quotation marks omitted).
Defendant further contends that the trial court erred in failing to classify the real property located at 949 Old Charlotte Road as the separate property of plaintiff with a marital component to be distributed. Specifically, defendant takes issue with the portion of Finding of Fact 18(b) wherein the trial court found that "since neither party met their burden [to show the property was either marital or separate], this property is not included in the equitable distribution." Defendant cites various pieces of "evidence before the court, [with] no evidence disputing these facts." Because we are unable to consider what the evidence was in the court below on the record created by defendant, accordingly, we dismiss this argument.
Like credibility determinations, the weight of the evidence is a matter left to the finder of fact, and this Court does not reweigh the evidence produced at trial or substitute its judgment for that of the finder of fact. See, e.g., In re Patron, 250 N.C.App. 375, 384, 792 S.E.2d 853, 860 (2016).
Finally, defendant argues that the trial court erred in declining to classify and distribute the rental proceeds from real property located at 306 Old Charlotte Road and 949 Old Charlotte Road. Defendant specifically takes issue with Finding of Fact 20, in which the trial court determined that no credible evidence had been presented that would permit the court to classify and thus potentially distribute the rental income from two pieces of real property. Once again, on the record before us, we cannot know what evidence was before the trial court on this point; moreover, even if we did have the transcripts of the trial, we would not be able to review the trial court's determinations on matters of credibility. Grasty, 125 N.C.App. at 739, 482 S.E.2d at 754. This argument is dismissed.
C. Classification and valuation related to the former marital residence
On the record provided, we are able to address one of defendant's appellate arguments: whether the trial court erred in classifying as divisible property the increase in the net value of the marital residence that occurred between the date of the Order of Interim Distribution of Marital Property and the date of the trial, as well as valuing the marital residence itself on the date of the trial rather than at the time of the interim order. We agree with defendant that the trial court did not follow the pertinent statutory mandates in making these determinations.
As previously noted, the trial court here had formerly distributed to defendant both the marital residence and its associated debt in the Order of Interim Distribution of Marital Property dated 2 November 2020, "leaving only the issue of valuation" for resolution at the trial. The interim order specifically decreed that defendant was given "full ownership rights to said residence and its indebtedness" and required plaintiff to effectuate a transfer of deed to the residence to defendant. This interim distribution of the marital residence and its associated debt was proper under our General Statutes. See N.C. Gen. Stat. § 50-20(i1) (2021) (providing that "the court may, at any time after an action for equitable distribution has been filed and prior to the final judgment of equitable distribution, enter orders . . . provid[ing] for a distribution of marital property, marital debt, divisible property, or divisible debt"). The trial court was then required to give "proper credit" to the interim distribution in making its final equitable distribution between the parties. Id.
In Finding of Fact 12 of the Amended Equitable Distribution Judgment and Order, the trial court found that the net value of the marital residence at the date of separation was $419,926.94 and at the date of distribution was $555,000, yielding an increase between those two dates of $135,073.06, which the trial court specifically credited to "market conditions." The trial court then classified this increase in value as divisible property and distributed it to defendant. In both this classification of the increase in net value and in the valuation of the marital residence as of the date of trial, the court failed to comply with applicable statutory mandates, and thereby abused its discretion. Wiencek-Adams, 331 N.C. at 691, 417 S.E.2d at 451.
Divisible property includes, inter alia,
appreciation . . . in value of marital property and divisible property of the parties occurring after the date of separation and prior to the date of distribution, except that appreciation . . . in value which is the result of postseparation actions or activities of a spouse shall not be treated as divisible property.N.C. Gen. Stat. § 50-20(b)(4). Thus, passive increases in value-such as those due to "market conditions"-of the marital property-such as the marital residence here- are divisible property subject to equitable distribution until the marital property is distributed, after which point any passive increases in the value of the property occur outside the marital estate and are not subject to distribution. Johnson v. Johnson, 230 N.C.App. 280, 291750 S.E.2d 25, 33 (2013). See also Daly v. Daly, 255 N.C.App. 448, 2017 N.C.App. LEXIS 710, at *10 (2017) (unpublished). Further, property distributed by means of an interim order becomes at that point the sole, separate property of the party to which it was distributed; thus, the date of distribution for purposes of valuation of such property is the date of the interim order, even if the issue of valuation is held open for resolution at a later trial. See Johnson, 230 N.C.App. at 290-91, 750 S.E.2d at 32-33; Daly, 2017 N.C.App. LEXIS 710, at *10-11.
While Daly is an unpublished decision and thus not binding on this Court, N.C. R. App. P. 30(e), we find its reasoning and discussion instructive as the relevant facts in that matter so closely mirror those presented in the case at bar. In Daly, the appellant had received a piece of real property under the terms of an interim distribution order which, like the interim order here, "left open the final determination of the [p]roperty's value." 2017 N.C.App. LEXIS 710, at *10-11. This Court rejected the appellant's argument "that the trial court erred in valuing the divisible interest in the [p]roperty at the time of its distribution to him by entry of the [i]nterim [o]rder as opposed to at the time of the [j]udgment," citing Johnson, 230 N.C.App. at 291, 750 S.E.2d at 33, for the proposition that property "distributed in an interim distribution order becomes the sole property of the party receiving it, and any payments thereon are for the benefit of that individual, not the marital estate." Id. at *9-10. The Court further held that "passive increases in value of the marital residence are to be considered divisible property subject to equitable distribution until the residence's distribution by interim order or final judgment; once property is distributed, any passive increases (or decreases) in value occur outside the marital estate." Id. at *9 (emphasis added) (citing N.C. Gen. Stat. § 50-20(i1)).
Here, once the former marital residence was distributed to defendant under terms of the interim order, it became her separate property rather than marital property, pursuant to the applicable definitions, and the date of that distribution was the appropriate date for purposes of the trial court's later valuation at trial. See N.C. Gen. Stat. § 50-20(b)(1), (2). In turn, any changes in the value of the former marital residence between its distribution to defendant and the date of trial were changes in value to defendant's separate property and thus not divisible. See id. § 50-20(b)(4). The trial court abused its discretion by failing to comply with these mandates as set forth in N.C. Gen. Stat. § 50-20 regarding the classification of the passive increase in the value of the former marital residence and in the valuation of that residence, Wiencek-Adams, 331 N.C. at 691, 417 S.E.2d at 451, and accordingly, remand of this case to the trial court is required for the correction of these errors.
III. Conclusion
The erroneous portions of the Amended Equitable Distribution Judgment and Order identified above are reversed, and the matter is remanded to the trial court for corrected findings of fact regarding the classification of the increase in value of the former marital residence as outside the marital estate and the valuation of that property at the time it was distributed to defendant, for further adjustments to the distribution of property between the parties as those corrections may necessitate, and other proceedings not inconsistent with this decision. The remainder of defendant's arguments on appeal are dismissed.
DISMISSED IN PART; REVERSED IN PART AND REMANDED.
Judges DILLON and MURPHY concur.
Report per Rule 30(e).